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Last Monday, the Chapel Hill Town Council approved the Ephesus-Fordham renewal plan. Depending on what news sources and opinion columnists you read, you might have some understanding of what this plan actually is and does, or you might not. Since there has been so much spin around the plan, here's our guide to what the Ephesus-Fordham plan includes - and what the Council passed last Monday.

What did the Town Council pass last Monday?

The Town Council did two things related to Ephesus-Fordham on Monday. The first thing they did, by an 8-1 vote, was amend the Land Use Management Ordinance (LUMO) to include form-based code, which is the basis for the new Ephesus-Fordham zoning. The second thing they did, by a 6-3 vote, was to take those new form-based code sections of the LUMO and apply them to the Ephesus-Fordham area.

They voted to apply the new sections of form-based code to all areas in the following map EXCEPT areas 1-4.

(Click for larger version)

Why didn't the Council apply the form-based code to areas 1-4?

Councilmember Sally Greene said during the meeting that, after discussions with some community members, she wanted to apply more affordable housing strategies to the project. Specifically, she wanted to change the zoning on areas 1-4 from WX-5, which would allow redevelopment of up to 5 stories, to WX-2 (redevelopment of up to 2 stories), with the provision that developers could go up to 5 stories if they made 10% of all units affordable units in their redevelopment. Council ultimately decided to postpone this discussion on areas 1-4, which is why those areas were not voted on at Monday's meeting.

UPDATE: Councilmember Sally Greene contacted me asking for some clarification to this section about her motion, which I'm happy to provide. As a clarification, affordable housing cannot be mandated in form-based code, and Greene's proposal for the density bonus would be completely voluntary for developers. Greene wanted to hold these areas out until town staff could refine the idea and return with an opinion as to whether this is a sufficient voluntary density bonus that would actually attract developers. Council agreed to postpone this discussion on areas 1-4, which is why those areas were not voted on at Monday's meeting.

What does this redevelopment mean for affordable housing?

The redevelopment proposal includes 144 affordable units that will be managed by DHIC, Inc. Some Council members expressed the view that the DHIC project did not have to be included as a part of the broader Ephesus-Fordham redevelopment plan, but DHIC’s Greg Warren spoke in support of the entire project as a way to make these affordable units better, more integrated, and provide better access to residents to improved transit and retail.

Furthermore, the Ephesus-Fordham rezoning enables mixed-use redevelopment across the district, which will enable developers to build more residential units, which is vital to improving affordable housing in Chapel Hill. One of the key reasons Chapel Hill’s housing has become so unaffordable is because of a lack of new housing units coming on the market. By rezoning the entire district as mixed-use, the Council has set the stage for new units to be added to the market, which will help lower rents across town as competition on the supply side increases as supply catches up with pent-up housing demand.

What does this redevelopment mean for tax revenue?

As you can see from the chart below, presented by Town staff at the April 23 meeting on Ephesus-Fordham, using the most conservative estimates, the redevelopment will pay for itself. Using a more realistic analysis, the redevelopment will provide much-needed tax revenue that will stay right here in Chapel Hill and Orange County.

(Click for larger image)

What does this redevelopment mean for traffic?

The Ephesus-Fordham renewal plan as enacted will enable several critical traffic and transportation improvements in an area of town currently plagued by traffic issues and confusing intersections. Specifically, the plan includes an extension of Elliott Road to Ephesus Church Road across Fordham Boulevard, and of Legion Road to Fordham Boulevard and a realignment of Ephesus Church Road to Elliott Road Extension.

The plan will also provide for much better pedestrian and bicycle connections as required under the Town’s Complete Streets policy.

What does this redevelopment mean for stormwater and flooding?

As a part of the redevelopment plan, major stormwater improvements will be required to reduce the flooding that currently occurs in much of the district during major rains. The Council will consider creating a stormwater municipal service district to help finance some of these improvements, as well as mandate higher standards than usual for this area of town under the Town’s Stormwater Master Plan, which is currently pending before the Council.

These improvements are critical to resolving the flooding issue because the area was developed under outdated regulations that did not require adequate safeguards to avoid flooding and protect water quality, making this another big win in the Ephesus-Fordham renewal plan.

10 Comments

Travis, thanks for putting this together. In a related note, I got asked by two different people this week about transit in the Ephesus Fordham area, in particular what kind of service is out there today. Here's a brief rundown:Both the TTA 400 and TTA 405 bus routes stop in the Ephesus-Fordham area today, at the intersection of E Franklin St Ephesus Church Rd, and provide service from 7:00 am to 10:45 pm, Monday through Friday. Both routes are likely used by employees and
shoppers of Eastgate.

Here is a link to the schedules and a map of the stop:TTA is proposing to expand service to this area (and the entire 400/405 corridor) by
adding later Saturday hours and initiating Sunday service for the first time ever in
August 2014.

http://www.triangletransit.org/aug2014#route400Chapel Hill Transit serves this part of town with the D and F routes from approximately 7 am to 9 pm; the CL adds additional service during the AM/PM rush hour on weekdays. The D and FG routes serve the Ephesus/Fordham area on Saturdays. Details on those routes may be found here.

"One of the key reasons Chapel Hill’s housing has become so unaffordable is because of a lack of new housing units coming on the market. " Do you realize that you are expressing an opinion based on supply-side economics (aka Reaganomics)? I've struggled with this theory since it was introduced in the 1990s, but I'm willing to keep an open mind if you can provide me with sufficient evidence to support your claim. I'd also like to hear how you explain why the huge influx of housing from Meadowmont and Southern Village and everything that has sprung up along Homestead has done nothing to make the community more affordable. What's the difference in that growth in housing and what you think is going to happen in Ephesus Fordham?

This isn't Reaganomics - it's basic Econ 101 supply and demand. When supply of a good is too limited to meet demand, prices go up. That's exactly what's happening in not just Chapel Hill, but desirable places to live all across the country, and in many cases, these other places have enacted similar policies as Chapel Hill to limit and control the housing supply, which is why we're seeing these housing affordability crises across the country.You want proof? Look no further than the impact of Lux Apartments and Shortbread Lofts in the student housing market right here in Chapel Hill. Warehouse Apartments dropped their rents by 21% in the wake of new competition. This now brings Warehouse into competition with other mid-market student rentals who offer fewer amenities than Warehouse, so now other rental communities have to make choices about their own rents because of greater competition in their price range, too. This is undeniably good for affordable housing in Chapel Hill, and it's all because of increasing the supply of housing to get closer to meeting demand.This great article in CityLab (formerly The Atlantic Cities) does a great job of summarizing the reason increasing housing supply is so critical to keeping housing affordable, and why the problem isn't being addressed:

Why are some metros more affordable than others? Flashback to Econ 101 – it’s supply and demand. Demand is how much people are able and willing to pay to live in a place, which depends on how desirable and economically productive a place is. Some factors that affect demand – like a good climate or an educated workforce – change very slowly over time, while others – like an oil boom or dot-com bust – can change more swiftly.

Housing demand alone does not determine home prices. Supply is crucial, too. Home prices depend on whether construction keeps up with demand. For the same increase in housing demand, a market that builds less housing will see bigger price increases than one that builds more housing. Although the real world is a lot more complicated than that, a simple scatterplot makes the point: expensive markets build little housing. Every metro where the median price per foot is over $200 has added housing at an annual rate of no more than 10 new units per 1,000 existing units since 1990. Conversely, no metro that builds a lot of housing is expensive. Of course, many markets are inexpensive and build little, like Detroit, Cleveland, St. Louis, and the upstate New York metros of Buffalo, Rochester, and Syracuse – all of which have faced long-term economic challenges and relatively weak housing demand.

For America’s most expensive housing markets to become significantly more affordable, they would need either a spectacular drop in demand – a local economic collapse, for example – or a dramatic increase in housing supply. But in these markets, geography and regulations limit new construction. Coastal California, south Florida, and parts of the Northeast are hemmed in by oceans, mountains, or both – unlike large swathes of the Midwest and South. Furthermore, regulations like zoning, onerous approval processes, and high permitting costs hold back construction. It’s complicated to tease out whether geography or regulations matter more because geographically hemmed-in areas also tend to be more heavily regulated (see this academic paper for evidence). But short of filling in San Francisco Bay or paving over the Everglades, local governments have a lot more control over regulation than geography. So why don’t expensive cities relax regulations in order to build more?

The politics of building new housing in expensive markets are tricky. While expanding the housing supply would improve affordability, new construction can change the character of a place in many ways: more congestion; a different skyline; an influx of new residents who are richer, poorer, darker, or whiter than current residents; as well the inconvenience during construction itself. Furthermore, not everyone wants to improve affordability. Another name for “housing costs” is “property values,” and current homeowners and landlords want property values to stay high. The beneficiaries of improved affordability are renters (though less so if they’re already protected by rent regulations); people who are priced out of expensive markets and therefore live elsewhere; and future generations – who usually have less political power and influence than homeowners and landlords. Plus, even people who might benefit from greater affordability might care more about preserving the character of their neighborhood.

In all, today’s unaffordable markets are likely to stay unaffordable. A collapse in demand is nothing to wish for; geographic constraints are nearly impossible to change; and strong political forces make building regulations difficult to relax. Although some expensive metros, like San Francisco, New York, and Boston, are currently building more housing than in the recent past, and New York’s new mayor is pushing to increase construction further, it would take many years of construction activity at much higher than historic levels to make today’s least affordable metros more within reach of the middle class.

And then there's this article from New York Times Magazine that explains how the problem of constrained housing supply is affecting affordable housing worldwide, and what some policymakers have and are planning to do about it:

New York’s new mayor, Bill de Blasio, who promised, on the campaign trail, to build more than 100,000 affordable apartments, seems to have an inkling of what will be required. “It’s going to take a willingness to use height and density to the maximum feasible extent,” he has said. “I don’t have a hang-up about it.”

But then, lots of people think they know what to do to fix housing: Stick it to the landlord with rent controls. Require developers to set aside low-cost units. Build more subsidized housing. Distribute more rent vouchers or, as San Francisco has recently done, funnel taxes and fees into a housing trust fund. For those with more faith in market forces, there is always the loosening of zoning regulations, in imitation of sprawling Houston — which is indisputably cheap, so long as you don’t factor in the cost of driving.

Yet many of these solutions are dwarfed by the sheer size of the problem. London alone needs, by one count, 800,000 new units by 2021 to meet both pent-up and new demand. Sydney, where the median rent on a two-bedroom apartment is now $2,600 a month, aspires to build more than half a million units by 2031, a goal for which it would have to double its normal pace of construction. New York needs more than 300,000 units by 2030. By contrast, inclusionary zoning, a celebrated policy solution that requires developers to set aside units for working and low-income families, has created a measly 2,800 affordable apartments in New York since 2005. It’s not clear we have the fortitude to deal with these shortages head-on.

And here's another CityLab article about San Francisco's affordability crisis and how it got to be so bad. (Hint: They did a lot of things Chapel Hill has done/is doing to create the most unaffordable city in the country):

A great quality of life and a lot of high-paying professional jobs meant that a lot of people wanted to live here. And they still do.

But the city did not allow its housing supply to keep up with demand. San Francisco was down-zoned (that is, the density of housing or permitted expansion of construction was reduced) to protect the "character" that people loved. It created the most byzantine planning process of any major city in the country. Many outspoken citizens did—and continue to do—everything possible to fight new high-density development or, as they saw it, protecting the city from undesirable change.

Unfortunately, it worked: the city was largely "protected" from change. But in so doing, we put out fire with gasoline. Over the past two decades, San Francisco has produced an average of 1,500 new housing units per year. Compare this with Seattle (another 19th century industrial city that now has a tech economy), which has produced about 3,000 units per year over the same time period (and remember it's starting from a smaller overall population base). While Seattle decided to embrace infill development as a way to save open space at the edge of its region and put more people in neighborhoods where they could walk, San Francisco decided to push regional population growth somewhere else.

Whatever the merits of this strategy might be in terms of preserving the historic fabric of the city, it very clearly accelerated the rise in housing prices. As more people move to the Bay Area, the demand for housing continues to increase far faster than supply.

If there was true demand Travis, they wouldn't need to be undoing all the controls they've put into place over the years. The fact that they have had to stimulate demand by offering to reduce their standards makes it supply side economics, not Economics 101.It's good to learn from other communities but it has never worked to adopt strategies that are successful elsewhere and transplant them into new environments. Successful leaders customize the programs and strategies that work elsewhere for adaptation in their own communities.

I've seen you make this association before, and don't get the comparison. Say more about that.Meanwhile, I think you're right to ask for evidence that "proves" build what seems like an obvious insight—restrictions on housing in desirable places leads to rising prices. Unfortunately, very few cities in the U.S. seem to build enough housing, making it difficult to find a perfect counter-point. Here's an article arguing that Philadelphia is building enough residential/commercial space at the moment:http://thisoldcity.com/policy/apartment-boom-continues-philadelphia-buil... Chapel Hill has grown along with the university, and the region's economy. If it had successfully closed down that growth prematurely, it could have become another Santa Barbara, but instead it allowed limited growth, which quickly attracted many residents. This new project will allow growth to occur in a bit more orderly pattern, with, hopefully, fewer bureaucratic and legal setbacks that increase the costs of building without providing other benefits. This, in turn, should make it easier to build affordable, high-density housing projects.

Supply side economics (Reaganomics) basically says that if you eliminate regulations, production will increase, prices will fall, and more jobs will be created. In theory, more stuff will increase demand and both consumers and producers will get that which makes them happy (stuff for consumers, profits for producers). I'm not saying this doesn't happen in any industry, but if it was true for the local housing market, then the addition of all the large housing developments I mentioned above would have brought housing prices down, and as a result generated sufficient revenues for the town to cover the cost of municipal services. We all know that the opposite has happened. So why are well educated people like Travis so confident that the EF plan is going to be different? I have no doubt that the producers/developers will get what they want, and the people who chose to live in the new developments will get what they want, but what about the town itself? IF the county agrees to help pay for the infrastructure and IF there are no costs overruns and IF no new problems arise in the construction (like the hazardous waste problem at the 123 W. Franklin site), then the town MAY be able to cover the costs of the infrastructure. And IF the impact of this new housing doesn't create any additional load on the public schools and all the municipal services, then new tax revenues may cover some or all of the costs associated with those new residents. But since the town doesn't really know what the costs of services are, the figures provided in the public presentations are incomplete. Dwight Bassett stood up at one of the Obey Creek meetings and declared that a new modeling tool that would accurately calculate the costs and revenues for projects like this, customized to Chapel Hill assumptions, was being developed and would be available in January. Until the town can actually produce something like that and starts looking at costs and revenues from a fully informed perspective, myself and many others are going to continue challenging declarative statements like the ones Travis made.

I've seen no reason to believe that Town staff would deliberately and purposefully produce wrong figures when it comes to estimating the cost of service and the returns from a potential investment, and so far, all the figures presented by independent, Town-hired consultants and Town staff about pending developments indicate that there will be positive returns for the Town.As for your other claims, could you provide some context and citations for your statement, "We all know that the opposite has happened" with other developments when it comes to cost of service and returns on investment?

Long term planning requires capital budgets. Those budgets should be planned out over 5-10-20 year horizons. The fact that they don't have a capital budget for any of this work and are having to leverage Town Hall says something to me about the town's financial planning. That's not a slam on staff. It was the Town Council that chose to fund the library expansion when they couldn't afford it, using up capital funds for a luxury after years of recession. Now they are digging the hole deeper.

When the form base code was first presented to the Council last year in a work session, staff was very clear about what could not be required under form based code but can be required using the Special Use Permit process. For example form base code can not be used to require affordable housing, energy efficiency standards and public transportation improvements. Donna Bell asked at several sessions about affordable housing and Jim Ward asked about energy efficiency standards. The 141 units of affordable housing are not due to the form base code but due to the special allocation of town owned land to an affordable housing project. Perhaps increased revenue from this area will make it easier for the town to allocate more tax dollars for affordable housing, but it will not be due to form base code. The new code has some incentives for participating in energy efficiency programs. However, they are not requirements and staff commented that there was much variation in other communities in participation rate. The issue of stormwater control remains critical. My analysis of the plan is different from Travis's. The ongoing flooding of the area is due to rainfall upstream from the E-F area. The proposed improvements to stormwater infrastructure within E-F will not be able to hold the large amount of water that cause flooding but they will reduce sediment and improve water quality. The new rules should mean that as properties are developed, there will not be any increase in the amount of storm water produced. The new townwide stormwater plan is critical and I hope it will include $ incentives for raingardens and other improvements. Given the DOT funding schedule, I agree that it is a good investment to borrow money using our Town Hall as collateral for the street improvements. The income generation graph that Travis showed was based on assumptions presented to council. The $26.4 million estimate called conservative was produced by consultants the town hired. The higher value of $46.9 million was produced by staff by using the average of the last three projects completed in the different development categories(54-East etc.) Hopefully the higher value will be correct since that is the only way the new development will pay for more public transportation. (This area is not where the proposed light rail will go.) I attended several chamber of commerce and realtor meetings last summer (I even paid for the ticket.) They strongly supported form based code and many hoped it would become universal. (I believe the current council when they say it will not become town wide.) If the reason for lack of redevelopment was the SUP and lack of infrastructure, we will find out soon. Loren